FGP - Ferrellgas Partners L.P. Reports Fiscal Second Quarter 2019 Results

March, 08 2019 07:00 AM Ferrellgas Partners L.P.

Total Retail propane sales volume for the quarter increased approximately 2 percent leading to a 4 percent increase in gross margin dollars over the prior year on weather that was 0.7 percent colder than the prior year.
Retail customer growth of approximately 25,000, or 4 percent over prior year.
Tank Exchange sale locations now exceed 53,700, up 10 percent compared to prior year.
5 accretive acquisitions of Blue Rhino independent distributors completed this fiscal year.

LIBERTY, Mo., March 08, 2019 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its fiscal second quarter ended January 31, 2019.

For the quarter, the Company reported a net earnings attributable to Ferrellgas Partners, L.P. of $43.3 million, or $.44 per common unit, compared to prior year period net loss of $1.8 million, or $(.02) per common unit.

Adjusted EBITDA, a non-GAAP measure, was $119.7 million compared to $120.6 million in the prior year. The following table represents the contribution to adjusted EBITDA from ongoing propane operations as well as from assets that were sold during 2018.

(in millions)

Q2 2019

Q2 2018
Propane Operations and Corporate Support

$119.7

$116.7
Results from Assets Sold in 2018

-

$3.9
Consolidated Adjusted EBITDA

$119.7

$120.6

On a trailing twelve month basis, adjusted EBITDA from ongoing propane operations and corporate support as of January 31, 2019 is $229.4 million compared to $226.5 million as of October 31, 2018.

The Company’s propane operations reported that total gallons sold of 309.7 million were consistent with the prior year. Margins were 3.1¢, or 4.2 percent higher than the prior year despite increased competitive pressure in the tank exchange business. The Company continues its aggressive approach to gaining market share. This strategic focus resulted in approximately 25,000 new customers, or approximately 4 percent more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased over 10 percent from prior year to over 53,700 locations. Overall, the increase in sales volume growth and margins per gallon resulted in an increase in gross margin dollars of $9.3 million. The Company’s ongoing commitment to investing in the business led to higher operating expenses during the quarter which were largely associated with serving over 25,000 new customers, 5,000 new tank exchange locations and additional non-transport gallons sold. As a result of this investment and the growth in sales volumes, operating, general and administrative expenses in our Propane segment were $5.6 million higher than the prior year.

Liquidity of $236.8 million at January 31, 2019 resulted from $196.2 million of available borrowing capacity on the Company’s secured credit facility and $40.6 million of cash.

“We continue to pursue our strategy to invest in the growth of the business and are achieving success faster than anticipated,” said James E. Ferrell, Interim Chief Executive Officer and President of Ferrellgas. “We are committed to growing market share organically and through acquisitions. We continue the successful integration of Blue Rhino independent distributors as we capture more EBITDA from this business. We continue to invest in our best-in-class fleet. Additionally, continued favorable weather led to extremely strong performance in February that we expect to continue through the midpoint of our third quarter.”

As previously announced, the Company indefinitely suspended its quarterly cash distribution as a result of not meeting the required fixed charge coverage ratio contained in the senior unsecured notes due 2020.

In addition to solidifying the Company’s liquidity with the fourth quarter 2018 closing of the $575 million secured credit facility and extension of its accounts receivable securitization facility and cash from 2018 announced asset sales, the Company continues to make progress in evaluating options to address its leverage.

“Our Company is focused on growth and operational excellence,” said Ferrell. “We have the liquidity to be flexible and continue this focused effort and I expect to resolve our leverage situation to the benefit of our Company for continued success.”

About Ferrellgas
Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., and subsidiaries, serves propane customers in all 50 states, the District of Columbia, and Puerto Rico. Ferrellgas employees indirectly own 22.8 million common units of the partnership, through an employee stock ownership plan. Ferrellgas Partners, L.P. filed a Form 10-K with the Securities and Exchange Commission on September 27, 2018. Investors can request a hard copy of this filing free of charge and obtain more information about the partnership online at www.ferrellgas.com.

Forward Looking Statements
Statements in this release concerning expectations for the future are forward-looking statements. A variety of known and unknown risks, uncertainties and other factors could cause results, performance, and expectations to differ materially from anticipated results, performance, and expectations. These risks, uncertainties, and other factors include those discussed in the Form 10-K of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp. for the fiscal year ended July 31, 2018, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts

William Ruisinger, Interim Chief Financial Officer – billruisinger@ferrellgas.com 816-792-7914

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)








ASSETS

January 31, 2019

July 31, 2018








Current Assets:





Cash and cash equivalents

$
40,647


$
119,311


Accounts and notes receivable, net (including $201,717 and $120,079 of accounts receivable pledged as collateral at January 31, 2019 and July 31, 2018, respectively)


203,164



126,054


Inventories


89,784



83,694


Prepaid expenses and other current assets


36,616



34,862


Total Current Assets


370,211



363,921









Property, plant and equipment, net


584,334



557,723


Goodwill, net


247,478



246,098


Intangible assets, net


113,558



120,951


Other assets, net


72,539



74,588


Total Assets

$
1,388,120


$
1,363,281
















LIABILITIES AND PARTNERS' DEFICIT












Current Liabilities:





Accounts payable

$
63,639


$
46,820


Short-term borrowings


-



32,800


Collateralized note payable


140,000



58,000


Other current liabilities


147,253



142,025


Total Current Liabilities


350,892



279,645









Long-term debt (a)


2,083,031



2,078,637


Other liabilities


37,547



39,476


Contingencies and commitments












Partners Deficit:





Common unitholders (97,152,665 units outstanding at January 31, 2019 and July 31, 2018)


(997,154
)


(978,503
)

General partner unitholder (989,926 units outstanding at January 31, 2019 and July 31, 2018)


(69,981
)


(69,792
)

Accumulated other comprehensive income (loss)


(9,049
)


20,510


Total Ferrellgas Partners, L.P. Partners' Deficit


(1,076,184
)


(1,027,785
)

Noncontrolling interest


(7,166
)


(6,692
)

Total Partners' Deficit


(1,083,350
)


(1,034,477
)

Total Liabilities and Partners' Deficit

$
1,388,120


$
1,363,281









(a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $357 million of 8.625% notes which are liabilities of Ferrellgas Partners, L.P. and not of Ferrellgas, L.P.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



(in thousands, except per unit data)

(unaudited)




Three months ended

Six months ended

Twelve months ended




January 31

January 31

January 31





2019



2018



2019



2018



2019



2018


Revenues:













Propane and other gas liquids sales

$
550,112


$
592,239


$
885,078


$
894,997


$
1,633,057


$
1,533,635


Midstream operations


-



117,276



-



238,036



44,283



499,908


Other


23,265



45,641



40,608



76,778



111,677



147,753


Total revenues


573,377



755,156



925,686



1,209,811



1,789,017



2,181,296

















Cost of sales:













Propane and other gas liquids sales


311,531



362,918



515,667



542,433



946,648



882,347


Midstream operations


-



107,067



-



215,192



40,367



462,965


Other


3,422



20,787



6,469



34,489



40,634



69,353

















Gross profit


258,424



264,384



403,550



417,697



761,368



766,631

















Operating expense


121,219



123,716



231,550



234,178



469,120



448,428


Depreciation and amortization expense


19,605



25,485



38,597



51,217



89,175



102,759


General and administrative expense


16,342



14,891



30,521



28,055



56,867



51,124


Equipment lease expense


8,415



6,954



16,278



13,695



30,855



28,054


Non-cash employee stock ownership plan compensation charge


1,944



4,031



4,692



7,993



10,558



16,382


Asset impairments


-



10,005



-



10,005



-



10,005


Loss on asset sales and disposals


2,216



39,249



6,720



40,144



153,975



48,133

















Operating income (loss)


88,683



40,053



75,192



32,410



(49,182
)


61,746

















Interest expense


(44,891
)


(42,673
)


(88,769
)


(83,480
)


(173,756
)


(163,718
)

Other income, net


86



684



105



1,195



(162
)


1,398

















Earnings (loss) before income tax benefit


43,878



(1,936
)


(13,472
)


(49,875
)


(223,100
)


(100,574
)
















Income tax expense (benefit)


3



(162
)


161



215



(2,732
)


(926
)
















Net earnings (loss)


43,875



(1,774
)


(13,633
)


(50,090
)


(220,368
)


(99,648
)
















Net earnings (loss) attributable to noncontrolling interest (b)


531



69



38



(332
)


(1,874
)


(658
)










































Net earnings (loss) attributable to Ferrellgas Partners, L.P.


43,344



(1,843
)


(13,671
)


(49,758
)


(218,494
)


(98,990
)
















Less: General partner's interest in net earnings (loss)


433



(19
)


(137
)


(498
)


(2,185
)


(990
)
















Common unitholders' interest in net earnings (loss)

$
42,911


$
(1,824
)

$
(13,534
)

$
(49,260
)

$
(216,309
)

$
(98,000
)
















Earnings (loss) Per Common Unit













Basic and diluted net earnings (loss) per common unitholders' interest

$
0.44


$
(0.02
)

$
(0.14
)

$
(0.51
)

$
(2.23
)

$
(1.01
)
















Weighted average common units outstanding - basic


97,152.7



97,152.7



97,152.7



97,152.7



97,152.7



97,152.7
































Supplemental Data and Reconciliation of Non-GAAP Items:



















Three months ended

Six months ended

Twelve months ended




January 31

January 31

January 31





2019



2018



2019



2018



2019



2018

















Net earnings (loss) attributable to Ferrellgas Partners, L.P.

$
43,344


$
(1,843
)

$
(13,671
)

$
(49,758
)

$
(218,494
)

$
(98,990
)

Income tax expense (benefit)


3



(162
)


161



215



(2,732
)


(926
)

Interest expense


44,891



42,673



88,769



83,480



173,756



163,718


Depreciation and amortization expense


19,605



25,485



38,597



51,217



89,175



102,759


EBITDA


107,843



66,153



113,856



85,154



41,705



166,561


Non-cash employee stock ownership plan compensation charge


1,944



4,031



4,692



7,993



10,558



16,382


Asset impairments


-



10,005



-



10,005



-



10,005


Loss on asset sales and disposal


2,216



39,249



6,720



40,144



153,975



48,133


Other income, net


(86
)


(684
)


(105
)


(1,195
)


162



(1,398
)

Severance costs $690 included in operating costs for the three, six and twelve months ended period January 31, 2019 and $910 included in general and administrative costs for the three, six and twelve months ended January 31, 2019. Also includes $358 in operating costs for the six and twelve months ended period January 31, 2018 and $1,305 included in general and administrative costs for the six and twelve months ended January 31, 2018.


1,600



-



1,600



1,663



1,600



1,663


Legal fees and settlements


5,608



2,118



9,172



2,118



13,119



2,118


Multi-employer pension plan withdrawal settlement


-



-



1,524



-



1,524



-


Exit costs associated with contracts - Midstream dispositions


-



-



-



-



11,804



-


Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(986) included in operating expense for the twelve months ended January 31, 2018. Also includes $(314), $1,293 and $1,037 included in midstream operations cost of sales for the three, six and twelve months ended January 31, 2018, respectively.


-



(314
)


-



1,293



-



51


Net earnings (loss) attributable to noncontrolling interest (b)


531



69



38



(332
)


(1,874
)


(658
)

Adjusted EBITDA (c)


119,656



120,627



137,497



146,843



232,573



242,857


Net cash interest expense (d)


(41,679
)


(39,734
)


(82,578
)


(77,791
)


(165,679
)


(153,049
)

Maintenance capital expenditures (e)


(26,147
)


(4,640
)


(31,532
)


(13,344
)


(45,805
)


(23,203
)

Cash refund from (paid for) taxes


4



(6
)


2



(12
)


305



(296
)

Proceeds from certain asset sales


899



2,999



1,960



4,207



6,956



8,126


Distributable cash flow attributable to equity investors (f)


52,733



79,246



25,349



59,903



28,350



74,435


Distributable cash flow attributable to general partner and non-controlling interest


1,055



1,585



507



1,198



567



1,489


Distributable cash flow attributable to common unitholders (g)


51,678



77,661



24,842



58,705



27,783



72,946


Less: Distributions paid to common unitholders


-



9,716



9,715



19,431



29,145



38,861


Distributable cash flow excess/(shortage)

$
51,678


$
67,945


$
15,127


$
39,274


$
(1,362
)

$
34,085

















Propane gallons sales













Retail - Sales to End Users


239,044



235,071



368,711



354,365



651,314



606,469


Wholesale - Sales to Resellers


70,655



74,942



119,615



128,371



231,454



236,480


Total propane gallons sales


309,699



310,013



488,326



482,736



882,768



842,949






















































(b)
Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.























(c)
Adjusted EBITDA is calculated as net earnings (loss) attributable to Ferrellgas Partners, L.P., less the sum of the following: income tax expense (benefit), interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, asset impairments, loss on asset sales and disposal, other income, net, severance expense, legal fees and settlements, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions, unrealized (non-cash) loss (gain) on changes in fair value of derivatives, and net earnings (loss) attributable to noncontrolling interest. Management believes the presentation of this measure is relevant and useful, because it allows investors to view the partnership's performance in a manner similar to the method management uses, adjusted for items management believes makes it easier to compare its results with other companies that have different financing and capital structures. This method of calculating Adjusted EBITDA may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP.

(d)
Net cash interest expense is the sum of interest expense less non-cash interest expense and other expense, net. This amount includes interest expense related to the accounts receivable securitization facility.

(e)
Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.

(f)
Distributable cash flow attributable to equity investors is calculated as Adjusted EBITDA minus net cash interest expense, maintenance capital expenditures and cash paid for taxes plus proceeds from certain asset sales. Management considers distributable cash flow attributable to equity investors a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to equity investors. Distributable cash flow attributable to equity investors, as management defines it, may not be comparable to distributable cash flow attributable to equity investors or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow attributable to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to equity investors may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP.

(g)
Distributable cash flow attributable to common unitholders is calculated as Distributable cash flow attributable to equity investors minus distributable cash flow attributable to general partner and noncontrolling interest. Management considers distributable cash flow attributable to common unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to common unitholders. Distributable cash flow attributable to common unitholders, as management defines it, may not be comparable to distributable cash flow attributable to common unitholders or similarly titled measurements used by other corporations and partnerships. Items added to our calculation of distributable cash flow attributable to common unit holders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to common unitholders may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Company Name:	Ferrellgas Partners L.P.
Stock Symbol:	FGP
Market:	NYSE

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